East German Adventures

From the start of the 1990s, the Treuhand and reunification of Germany dominated much of the M&A agenda. But even before the establishment of the Treuhand, Count Matuschka campaigned to encourage a completely different approach to the privatisation of the DDR’s assets, as he explains: Kohl appointed a number of people to give him advice on how to handle the privatisation process, and I was one of them. I developed the coupon programme, which would have helped to enrich the East German managements and employees of these companies, and given them a stake in the development of their businesses. But in the end, our government did the reverse. In eastern Germany, out of a peasant paradise, we created an unemployment paradise. We left those people without equity, and instead gave a DM 1,200 billion subsidy to West German companies to take them over. I was not alone in speaking out against this. Karl Otto Pohl of the Bundesbank for instance expressed a similar opinion. So there were those who made an open stand against this approach. Instead, huge subsidies were spent helping West German investors put capital intensive businesses into East Germany, which in the case of Bitterfeld meant an investment of DM 14 million for every place of work preserved at the site.1